What does the Other Insurance with this Insurer provision prevent?

The Other Insurance with this Insurer provision is designed to prevent a policyholder from profiting through the ownership of multiple policies with the same insurance company. Essentially, it ensures that if an individual has multiple insurance policies that cover the same risk, the total amount of benefits paid out will not exceed the actual loss or value at risk. This provision helps to maintain the principle of indemnity, which is fundamental in insurance—that is, insurance is meant to restore the insured to the same financial situation after a loss, not to provide a profit. Therefore, this provision seeks to avoid scenarios where individuals might take advantage of holding multiple policies to claim more than they have actually lost or incurred in expenses.

This mechanism is important in preserving the insurance system's integrity and is a standard feature in various insurance policies to prevent potential abuse and maintain fair practices.